Should the First Trust Mid Cap Core AlphaDEX ETF (FNX) be on your investment radar?

TThe First Trust Mid Cap Core AlphaDEX ETF (FNX) was launched on 08/05/2007 and is a passively managed exchange-traded fund designed to provide broad exposure to the Mid Cap Blend segment of the US stock market.

The fund is sponsored by First Trust Advisors. It has amassed over $ 1.06 billion in assets, making it one of the mid-sized ETFs attempting to match the Mid Cap Blend segment of the US stock market.

Why the mid-cap mix

Mid-cap companies, with a market cap of between $ 2 billion and $ 10 billion, offer investors many things that small and large companies don’t, including less risk and higher growth opportunities. Thus, companies that fall into this category offer a stable and high growth investment.

Typically holding a mix of growth and value stocks, blended ETFs also demonstrate the qualities of value and growth investing.

Costs

Investors should also pay attention to the expense ratio of an ETF. Lower-cost products will produce better results than higher-cost products, assuming all other metrics remain the same.

This ETF’s annual operating expenses are 0.60%, making it one of the most expensive products in the space.

It has a 12 month dividend yield of 0.87%.

Sector exposure and main titles

Even though ETFs offer diversified exposure that minimizes the risk associated with individual stocks, it is still important to examine a fund’s holdings before investing. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the highest allocation to the financial services industry – around 19.80% of the portfolio. Industrials and Consumer Discretionary complete the top three.

In terms of individual holdings, Avis Budget Group, Inc. (CAR) accounts for approximately 0.48% of total assets, followed by Apa Corporation (APA) and Ovintiv Inc. (OVV).

The top 10 holdings represent approximately 4.21% of total assets under management.

Return and risk

FNX seeks to match the performance of the Nasdaq AlphaDEX Mid Cap Core Index before fees and expenses. The NASDAQ AlphaDEX Mid Cap Core Index is an enhanced index that uses the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Index.

ETF yield is around 26.43% so far this year and has increased by around 54.42% in the last year (as of 10/29/2021). Over the past 52 weeks, it has traded between $ 67.37 and $ 104.10.

The ETF has a beta of 1.29 and a standard deviation of 28.24% for the three-year period, making it a medium risk choice in the space. With around 452 participations, it effectively diversifies the risk specific to the company.

Alternatives

The First Trust Mid Cap Core AlphaDEX ETF has a Zacks ETF Rank of 3 (Hold), which is based on the expected return of the asset class, expense ratio and momentum, among other factors. Thus, FNX is a good option for those looking for exposure to the Style Box – Mid Cap Blend area of ​​the market. Investors could also consider other ETF options in the space.

The Vanguard MidCap ETF (VO) and the iShares Core S&P MidCap ETF (IJH) follow a similar index. While Vanguard MidCap ETF has $ 54.56 billion in assets, iShares Core S&P MidCap ETF has $ 66 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Final result

Retail and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility and tax efficiency; these types of funds are also excellent vehicles for long-term investors.

To learn more about this and other ETFs, search for products that match your investment objectives, and read articles on the latest developments in the ETF investment universe, please visit Zacks ETF Center.

Want key ETF information delivered straight to your inbox?

Zacks’ free fund newsletter will keep you up to date with top news and analysis, as well as top performing ETFs, on a weekly basis.

Get it for free >>

Click to get this free report

First Trust Mid Cap Core AlphaDEX ETFs (FNX): ETF Research Reports

Avis Budget Group, Inc. (CAR): Free Inventory Analysis Report

APA Corporation (APA): Free Stock Analysis Report

IShares Core S&P MidCap ETF (IJH): ETF Research Reports

ETF Vanguard MidCap (VO): ETF Research Reports

Ovintiv Inc. (OVV): Free Stock Analysis Report

To read this article on Zacks.com, click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Leave a Reply

Your email address will not be published. Required fields are marked *